Tamarack Valley Energy Ltd.

Good morning. Welcome everyone to the Tamarack Valley Energy LTD conference call and webcast on Wednesday, October 29, 2025, discussing the recent third quarter 2025 results press release. I would like to introduce today's speakers, Mr. Steve Baitels, President and Chief Financial Officer, Mr. Kevin Johnston, VP Finance, and Mr. Ben Stoodley, VP Engineering. If you would like to ask a question, please press star, then the number one on your telephone keypad to join the queue. If you would like to withdraw your question, please press star, then the number two. Thank you, Mr. Baitels. You may begin your conference.

Good morning and thank you. Welcome everyone to the call to discuss our third quarter operating and financial results. My name is Steve Baitels, president of Tamarack Valley. And today, I'm joined by Kevin Johnson, VP Finance, and Ben Studley, VP Engineering. This morning, Tamarack announced its Q3 results, another positive update to our 2025 guidance, and a dividend increase. Highlights of the quarter. Corporate production averaged 66,126 BOE a day, reflecting the previously announced 2,000 BOE a day impact of planned service interruptions at a third-party gas processing facility in the Charlie Lake. and maintenance turnarounds in the Clearwater. Our production guidance of 67,000 to 69,000 BOE per day remains on track for the full year. In terms of portfolio optimization, we continued with that strategy during the quarter. As we previously announced, Tamarack completed a $51.5 million synergistic tuck in acquisition of a private company in the Clearwater, adding approximately 1,100 barrels a day of production and over 114 net staff sections of clear water land, primarily in the West Nipissi area. We see significant operating infrastructure and water flood synergies on the newly acquired assets. In October, we closed the sale of our remaining non-core producing assets in Eastern Alberta for 112 million and disposed of approximately 63 million of undiscounted asset retirement obligations. This transaction is expected to reduce net production expense corporately by approximately 10% per BOE on a full year run rate basis. Tamarac has now completed its transition to a pure play Clearwater and Charlie Lake producer. Our strong base volumes and lower decline rates from expanded water flood activities in the Clearwater, combined with the Clearwater tuck-in acquisition, are expected to replace most of the production from the east asset divestiture in the fourth quarter of 2025 and has allowed us to maintain our full-year guidance range. In terms of shareholder returns, Tamarac repurchased 6.7 million shares during the quarter, which represents 1.3% of the 2024 year-end share count. During the quarter, we returned 57 million to shareholders through a combination of the base dividend and share buybacks. Consistent with our strategy of growing shareholder returns, We also increased our annual base dividend by 5% to $0.16 per share per year. Tamarac plans to move the timing of dividends from monthly to quarterly payments beginning in 2026. In the first nine months of the year, we have returned $194 million to shareholders through base dividends and share buybacks, representing a 6% return yield through the combination of both the dividend and the buybacks. In terms of the water flood, we increased Clearwater water flood injection volumes during the third quarter to exit at more than 30,000 barrels a day in September. This represents the updated 2025 exit target rate being achieved three months ahead of schedule. We expect 2025 exit injection rates to exceed 35,000 barrels a day, which would represent approximately 22% of our clear water production being under water flood support. This equates to a 250% increase over 2024 exit water injection rates. The significant response in oil rates from water flood have driven approximately 3,600 barrels a day of full-year production growth this year, which has been a key driver in the positive guidance revisions. In terms of our capital structure and net debt reduction, during the quarter, we completed a $325 million note offering, a five-year 2030 senior unsecured notes. The proceeds of the offering were used to redeem $100 million of our existing 2027 senior unsecured notes with the remaining proceeds used to reduce the drawn portion of the credit facility. Tamarac ended the third quarter with net debt of $631 million, which represents a reduction of $144 million, or 19% since the beginning of the year. With this note offering, Tamarac has laddered its debt maturity structure across several years and currently has undrawn credit capacity of over $700 million. In October, S&P raised our corporate credit rating from B to B+, as a reflection of Tamarac's ongoing debt reduction and strong operational performance. Ben is now going to walk through the latest developments in the Clearwater and Charlie Lake.

Thanks, Steve. Operationally, water flood in the Clearwater is driving our growth while the Charlie Lake continues to deliver strong, repeatable performance. Clearwater production has grown by 11% year over year. This continues to demonstrate the success of our primary development and strong response for the ongoing expansion of Tamarac's water flood program. Response from water flooding continues to grow with a total production uplift from water flood now estimated to be 4,500 barrels per day of oil. Year to date, Tamarac has drilled 20 injection wells, a source water well, and have converted 13 producing wells to injectors. Tamarac is demonstrating the long-term value creation and resource capture capability of deploying water flood as part of a multilateral development strategy in conventional heavy oil reservoirs. To demonstrate this, we can look at the highest producing well rates in the Clearwater during the month of September. Four of Tamarack's wells under water flood, the 16 of 2, 15 of 2, and 1 of 11 wells at Martin Hills, and the 11 of 24 well at Nipissi, were four of the 10 highest producing wells in the Clearwater in the month of September, despite all of these wells being brought on production three or more years ago. In the month of September, these four wells produced at a daily rate of approximately 940, 930, 430, and 490 barrels a day, respectively. These four wells under water flood have collectively produced nearly 2 million barrels of oil to date as of September. Tamarac plans to rig release 22 net producing wells and two injectors in the Clearwater in the fourth quarter of 2025. Our Charlie Lake asset continues to deliver strong results. The Charlie Lake produced approximately 14,000 barrels of oil equivalent during the quarter, reflecting planned service interruptions at a third party gas processing facility in the Pipestone area. We continue to await startup of the CSV Albright plant, and are prepared to commence delivery of gas as the facility is currently in the final stages of commissioning. Delays to the startup of the CSV Albright gas processing facility are not expected to have a significant impact on Tamarac's production for 2025 or 2026 with several mitigation plans already in place. Tamarac resumed drilling and completion activities with four net horizontal wells drilled and three net horizontal wells completed during the third quarter. Tamarac plans to continue running a one rig program for the remainder of 2025 and to rig release a total of four net wells in the Pipestone and Saddle Hills areas of the Charlie Lake in the fourth quarter 2025. I'll turn it over to Kevin to expand on the financial results and our updated corporate guidance.

Thank you, Ben. Q3 2025 marks the completion of our multi-year transition to a pure play Clear Low Water and Charlie Lake producer. In the quarter, we generated adjusted fund flow of $201 million, or 40 cents per share, which was in line with 2024. Tamarac earned $96 million of free fund flow, or 19 cents a share in Q3. In the first nine months of 2025, Tamarac has generated free fund flow of $320 million, or 63 cents per share, which is 17% higher than the first nine months of 2024, even with WTI pricing 14% lower. This year-over-year increase reflects the compounding effects of production outperformance, lower cash costs, and continued share buybacks. Since beginning our share buybacks in January 2024, Tamarac has repurchased 63 million shares, which represents over 11% of our 2023 year-end common share float. We believe that long-term share buybacks allow Tamarac to both accelerate and compound per share value. Since the fourth quarter of 2022, Tamarac has delivered debt adjusted production per share and debt adjusted fund slope per share growth of 40%. The ongoing reduction in our share count allows us to increase our dividend while keeping the absolute dollar payout relatively unchanged. Tamarac's base dividend will increase by 5% to 16 cents per share annually, beginning with the November 2025 payment. As Steve mentioned, During the quarter, Tamarac completed the tuck-in acquisition of a private Clearwater producer, the disposition of non-core producing assets in Eastern Alberta, and a bond refinancing. With all of this, Tamarac ended the quarter with net debt of $631 million, which represents approximately 0.6 times net debt to the trailing 12 months EBITDA. Since the fourth quarter of 2022, we have reduced our net debt by $750 million, and our net debt to the last 12-month EBITDA by an entire term. BAMRAC's balance sheet is in very strong position, with low leverage, a ladder maturity schedule, and currently 75% undrawn on its credit facility. We announced two positive revisions to annual guidance with the quarter. First, given the continued margin enhancement and expected cost savings from the ETH asset disposition, We further reduce guidance for net production expense by 5% on the full year. Second, we reduce guidance for royalty expenses by 1 and 2 percentage points on both the low and high end of our guidance, given lower commodity prices and greater gas cost allowance credits. Year to date, net production expenses have declined by 19% compared to the same period last year. The east disposition is expected to further reduce our net production expenses by 10% per BUE go forward. Tamarac will be announcing its 2026 corporate guidance and capital program in early December. I will now turn it back to Steve for closing commentary before we open the call to questions.

Thanks, Kevin. We announced two executive updates this morning as well. First off, Kevin Screen, Tamarac's chief operating officer, has decided to retire in January. Kevin joined Tamarac in 2011 as the vice president production and operations and has served as the chief operating officer since 2021. Kevin's 15 years of experience and integrity have been instrumental to the success of Tamarac, are an important part of the company's foundation. We all wish Kevin and his family a happy, lengthy, and healthy retirement. To ensure we keep one Kevin in the C-suite, Kevin Johnson, our Vice President of Finance, has been promoted to our Chief Financial Officer effective January 1st. Kevin joined Tamarac in 2023 and has been expanding his role since then to ensure a smooth transition. We'd like to congratulate both Kevins on these upcoming changes. Tamarack continues to be differentiated by the scale and quality of our assets. To our recent acquisition and divestiture activity, we continue to build on both of those factors with the overarching goal of becoming one of the most profitable exploration and production companies in North America. There are three important themes I'd like to emphasize about Tamarack, which have been further demonstrated this quarter. First, the margin of profit on our barrels is consistently improving as we streamline into the best-in-class asset and drive down unit costs. Second, the clear water aided by water flood continues to deliver best in class economics with growing production and lower declines, driving enhanced free cash flow margin. And third, we continue to increase returns to shareholders through meaningful buybacks and growing dividends. These themes contribute to a sustainable business where we see compounding free funds flow per share growth and sector leading margins. This positions Tamarac uniquely across all commodity price cycles. Our focus maintains on maximizing the value of our barrels for investors, and we will continue to allocate capital and free funds flow in a manner that maximizes shareholder returns. We see the buyback and water flood investments as our most attractive investments at modest commodity prices. On behalf of the executive team, We would like to thank our staff and board of directors in supporting the continued success of the company. Thank you. I will now turn it back to the moderator for questions.

Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touch-tone phone. Should you wish to cancel your request, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any case. Once again, that is star one should you wish to ask a question.

Once again, that is star one should you wish to ask a question. There are no questions as of this time.

I will now hand the call back to the management team.

Thank you. We will now read through some questions from the online Q&A. Our first question is for Mr. Ben Stoodley. Today you announced Clearwater water flood uplift of 4,500 barrels from water floods implemented prior to 2025. How many wells are responsible for these 4,500 barrels? Is the maximum expected from these wells, or is the number expected to increase?

Yeah, I think for that 4,500 barrels a day of uplift, we would attribute that to approximately 40 wells currently seeing response. They're in various parts of the cycle of response, so some are inclining and some are quite stable. So I don't believe all of the patterns have reached their peak yet, and that will continue to evolve, but it's about 40.

Thank you, Ben. Our next question is for Mr. Kevin Johnston. Given Q3 end net debt and given the disposition closed in October, it seems that net debt is in the low to mid $500 million range presently. Can you give us an update as to whether the expectation is to hit the net debt target sooner than previously communicated?

Thank you. So it's important to note that the 630 million net debt we have as that Q3 includes the east disposition. So they're on our balance sheet as assets held for sale. So those proceeds are already reflected in that 630 number. That being said, at our investor day in June, we were pointing to 2027 as when we saw ourselves

of achieving our net debt target and we do see that being accelerated with the recent success we've seen on lowering declines water flood performance and margin enhancement thank you kevin our next question is for mr ben studley the 1602 and 1502 wells are remarkable in september they produced more than double their primary production high are these unusual performances or do you Or do you expect to be able to rejuvenate other old wells to exceed their primary production highs?

Yeah, we do expect this trend to continue, particularly in the Martinup Hills area where we do have some older patterns. That's where 1502 and 1602 are. The other pattern we discuss often is our longest on injection W pattern, which is the lateral flood. And it's now showing a combined from the offsetting producers showing response uplift of almost 700 barrels a day. So it's also trending towards exceeding the initial peaks. We do have a large inventory of those wells, probably about 55 currently in the ground. And we continue to drill under these various water flood patterns to build that inventory further. So we do expect these trends to continue across that area of the play.

Thank you. Our next question is for Mr. Steve Vitels. How much does a new barrel of clear water oil from water flood compare to a new barrel from new drilling?

Yeah, I think just sort of easy math, it would be probably about half, depending on the style of the water flood injection. If we're drilling new injectors, I'd say you're probably going to be in that $5 to $6 a barrel range. And If you are converting wells, which are old producers, into injectors, the cost of that is probably about a third of drilling a new injector. So you're going to see those costs on an F&D basis trend even lower. So again, I think we highlighted it last year in our really strong reserve report and our really strong F&D metrics. I think you'll continue to see, as we put more water flood, that come through the business and As Ben just talked about, specifically at Martin Hills, with the response we're seeing, the incremental recoveries we're seeing there, we hope to continue to see that trend of that overall cost per barrel moving lower from a finding and development perspective.

Thank you. Our next question is for Mr. Steve Vitels again. With debt levels moderating, how is the company looking at M&A opportunities versus share repurchases and further dividend increases?

Yeah, I think at the end of the day, as Kevin mentioned, we're ahead of where we would thought we'd be and forecasted at investor day with respect to debt levels. Obviously, the East asset sale has accelerated that. But at the same time, we continue to look at maximizing shareholder value. And as we've walked through, there's a combination of different things we can do with that. It's allocating capital appropriately, and here we see water flood investment being the most attractive at a lower commodity price. We put limited capital in the ground today, and we get a significant amount of production response in what we see as hopefully a better commodity environment. In terms of M&A, you can see that we added the clear water tuck-in acquisition during the quarter conjunction with the disposition of the non-core pieces so you still see us shuffling the deck if you will in terms of coring up the clear water and i think our focus going forward will be continuing to do these smaller tuck-ins that offer synergies both on the infrastructure side the operating side and potentially the marketing side uh with our barrels and we've been successful in being able to do that i think the other element too is the more we can get cored up and take advantage of our infrastructure with water flood moving forward, you're going to see just enhanced full cycle profitability in the business. So all those elements are going to play a part. And lastly, on shareholder returns, the buyback continues to be top of mind here. We want to be front footed. At these levels, even at these commodity levels, we see a growing return profile through our business at depressed pricing. And we want to get ahead of that. And Ben just walked through what we're seeing on the water flood and the results and what they should indicate just moving forward from a reserve growth perspective and lower declines, lower sustaining capital, more margins. So, again, shareholder returns are top of mind, and we continue to want to be front-footed there and be opportunistic there at this time.

Thank you. Our next question is for Mr. Ben Stoodley. At a high level, what are some of the reasons why the water flood in the Clearwater has worked as well as it has so far?

Okay, our modeling and testing lands on really two primary reasons why that water flood has been so exceptional. One is the characteristics of the reservoir. This includes the relative permeability to oil and water. This creates a very efficient flood where the water naturally displaces oil rather than fingering through the water phase. And then the other thing is just the large surface area we create by drilling horizontal and multilateral wells is such a large step change from a vertical water flood. The rate at which your water is being injected is more like sweating into the reservoir or a soaker hose rather than high-rate injection, even though we are injecting at high rates. This caused the flood front to move very slowly through the reservoir. But despite that, the pressure front is moving quite quickly, and that's why we're seeing these changes. disproportionate responses at the producing wells.

Thank you. Our next question is for Mr. Steve Vitels. You touch on it in the financial statements, but can you speak to the strength in this quarter's production expense on a per BOE basis? How should we be thinking about the production expenses into 2026 compared to 2025 guidance?

Yeah, I think when you look at that, we guided to, with the east asset disposition there, what that means for OPEX moving forward on a run rate basis. So we do see OPEX trending down into 26, and we'll update that here in December when we come out with the budget. But again, I think really when you look at it, as we core up into the Clearwater and in the Charlie Lake, you're seeing that more efficient, higher net back barrel come through, which is a function of in a lot of cases, that lower OPEX that comes with the Clearwater. And again, the growth in the Clearwater and the growth just in production ahead of where we would have budgeted obviously is driving on a per BUE basis lower costs there as well. But I think ultimately at the end of the day, our goal here is to core up into the two plays that we're in, the Charlie Lake and the Clearwater we see best in class economics.

and as we look at the budget here in december uh that that uh margin in in that barrel should come through and we'll provide more uh detail then thank you our next question is for mr steve vitals again camera mentioned it is able to mitigate the delays in on-stream timing of the csv all break facility but can you provide any timing updates on when the facility could be on stream

Yeah, and I want to be careful here because it feels like there's a lot of false starts with this one through the year, and there's been some different messaging. As we've highlighted in the press release on the quarter and we've talked about previously, we've been able to do things to mitigate that, and even if there is delays, we see that mitigation being handled through some other processing alternatives that we have. Again, we drill to fill those volumes corporately here two in the Charlie Lake to manage that. However, the latest update we did receive is that the plant was in the warm-up phase and that we could be seeing gas volumes moving through that plant here this week. I have not heard any change, so I think for now we'd leave it at that. But again, as we look at it, and I want to make sure we drive the point home, is Even if there are further delays, we don't see any impact to our production guidance for 25, and we have different mitigating alternatives for 2026 as well, should there be further delays.

Thank you. Our next question is for Mr. Steve Vitels again. What is Tamarac's general view on A&D activity now that you've finished disposing of the non-core assets in your portfolio?

Yeah, we screen all assets. A and D the same way. And for that matter, we actually look at capital investment or all the business decisions very similarly. And if it is accretive to the business on a debt-adjusted free funds flow per share basis, does it make or internalize your plan better by competing for capital with existing assets or inventory? Those are all things that we look at and how... how do we sit currently versus where that opportunity set could lead us? And what threshold in terms of does that rank higher than what we currently have in the portfolio exists? So we look at a lot of different things, but again, as I mentioned earlier, tuckers in the clear water where we can leverage our infrastructure or operating experience, the water flood footprint, they're going to make a lot of sense for us. However, again, we'll be very disciplined with it. And again, the other thing I would say there, too, is it also has got to compete with our ability to buy back our own stock in many different ways. So I think we've shown the street that we've been very disciplined. We've had a plan in terms of what we want to bring in. And we'll continue to look at all of that from an opportunity perspective. But, you know, it's got to be accretive to the underlying earnings potential of Tamarac.

Thank you. Our next question is for Mr. Kevin Johnston. Are you considering adopting a drip program?

So we've been discussing, we see great value in buying back our shares and reducing our share count. You know, a drip program, you're issuing additional shares for your dividends. So kind of going the wrong way. So we're not looking at a dip program at this time, but you know, any investors who want to use their dividends to buy additional Tamarac stock, uh, options available.

Thank you. We have no more Q&A questions online, so I will pass it back to Steve to finish off the call.

Yeah, again, we just want to thank all our shareholders, our staff for the support here in the success of the company and the patience that you've had as we've transformed the company. But we're really excited now with where we're at in terms of being a pure play Charlie Lake and Clearwater producer. And hopefully here we'll talk to you guys again in December with what could be a good update on the future of the company with those core assets in place. Thank you.

Thank you, ladies and gentlemen. The conference has now ended. Thank you all for joining. You may all disconnect your